A proposed project has ﬁxed costs of $3,600, depreciation expense of $1,500, and a sales quantity of 1,300 units. What is the contribution margin if the projected level of sales is the accounting break-
Even point?
A) $3.92
B) $4.14
C) $4.50
D) $4.80
E) $5.00

Question

Quizplus · Accepted Answer

At the accounting break-even point, total revenue equals total costs, which include fixed costs and depreciation. The contribution margin per unit is calculated as (Fixed Costs + Depreciation) / Sales Quantity = ($3,600 + $1,500) / 1,300 = $3.92.

A Proposed Project Has ﬁXed Costs of $3,600, Depreciation Expense